This wasn’t the typical start to an Apple event.
Rather than a loud, slickly produced marketing video, Apple played an audio clip of late co-founder Steve Jobs speaking about creating “wonderful things” as his way of showing appreciation for humanity. Later on, an image flashed of Jobs holding the original iPhone during its launch 10 years ago.
Apple CEO Tim Cook reminisced about how the first iPhone “changed the world.”
Lost in the pomp and circumstance, however, was another key anniversary date: Sept. 5, 2007.
That’s when Apple slashed the price of its iPhone by $200 to $399, a little more than two months after the launch. The move upset a lot of early adopters who’d paid full price, but Jobs knew Apple had a hit on its hand and he wanted to pump up demand.
“We’ve clearly got a breakthrough product and we want to make it affordable for even more customers as we enter this holiday season,” Jobs said in the announcement.
By the following year, the price of the iPhone 3G dropped to $199 thanks to a phone subsidy from AT&T. It cost $599 without a contract.
On Tuesday, Apple, now under Cook, reversed course in a big way with the debut of the $1,000(the 256GB model costs $1,150), the high-end version of the three new iPhones unveiled at the new Apple campus in Cupertino, California. It also happens to be the model that gets the most design changes and the newest technologies.
The divide between the iPhone X and the cheaperand is the culmination of a gradual shift away from the original notion that there’s just one phone you need. Instead, Apple under Cook has created a myriad of options, with the iPhone X representing the high end of the brand.
“The move to the X is a return to the concept of the smartphone as an aspirational device, a status symbol,” said Maribel Lopez, an analyst at Lopez Research.
But for Apple, the real development here isn’t new technology like optical image stabilization or facial recognition. It’s scarcity and price. By introducing an expensive device with an air of exclusivity, Apple is trying to bring a little excitement back into the mix. After all, the fact that so many people — including your grandparents — use an iPhone doesn’t exactly scream “hip product.”
But by redrawing the lines of what a high-end phone can be, Apple is also widening the gap between those who can and those who can’t access the company’s latest and greatest. Now you’ll have to pay a steep premium to get the new edge-to-edge display design.
For Apple, that might be the point.
The exclusive nature of the iPhone X, which can’t be preordered until after the iPhone 8 and iPhone 8 Plus are already in stores, is heightened by reports that Apple faces supply constraints because of the phone’s OLED displays.
Even if you could afford it, you may not be able to buy one.
Apple declined to comment.
Right before Jobs recommended Cook as CEO, he told his successor to never ask what Jobs would have done.
“Just do what’s right,” Cook recalled Jobs telling him.
What’s right for Cook has been a move away from a narrow lineup of key products to a larger family of options that hits different prices and demographics.
There’s no longer just a single iPhone with a few options on storage. You have the budget model with the iPhone SE, a more affordable option with the iPhone 7 and 7 Plus, the new “mainstream” versions with the iPhone 8 and iPhone 8 Plus, and a “luxury” tier with the iPhone X.
This shift began with the introduction of the iPhone 6 and iPhone 6 Plus, which created a second tier for those who wanted a larger phone and optical image stabilization. Then came the iPhone 7 Plus and the introduction of a dual-lens camera — the first time a big, noticeable feature was introduced only in the top-tier model.
The iPhone X takes it much further, introducing a radically different look: a phone with a minimal frame, wireless charging, a more vibrant OLED display, facial recognition and fun “animojis” that take advantage of the front-facing camera. In contrast, the iPhone 8 and iPhone 8 Plus get a new glass back, as well as wireless charging, but look nearly identical to the previous three generations of iPhones.
The division is stark.
It also isn’t new. Apple pulled a similar move with the, with only the top-tier version including the Touch Bar display.
Then there was the $17,000 Apple Watch Edition (which, shockingly, is no longer available). The Apple Watch family got bigger on Tuesday with the, which has its own LTE radio and can be used without your phone.
Willingness to pay?
Apple’s move comes at a time when phone makers are pushing the envelope with new designs, like theor the , both of which pack in more screen and less frame. There’s also the , which boasts high-end features with a more reasonable price tag.
“The potential risk is that people really want an OLED display, aren’t tied to Apple and then opt for a Samsung Galaxy at a much lower price,” said Patrick Moorhead, an analyst at Moor Insights. “Samsung has a real opportunity.”
Apple might not be concerned about the competition. After all, iPhone users are notoriously loyal, and they’re growing. Cook boasted during the company’s earnings conference call in August that the number of customers outside of China moving over from Android was on the rise.
“I feel good about our ability to convince people to switch,” Cook said.
So maybe the price isn’t a deterrent?
After all, Apple isn’t the only one setting a new bar on price. Samsung’s Galaxy Note 8 starts at $930, way above the usual flagship phone price of around $650.
That’s been made a little easier to take by carriers’ adoption of monthly installment plans and leasing programs.
But it’s a tough ask for Apple fans, who’ll need to spend even more money to get the iPhone that’s markedly different from the one they’ve been holding for the past three years. While the iPhone 8 and iPhone 8 Plus are the more level-headed options for consumers, some buyers will experience the lingering feeling they’re missed out on something.
For many, it maybe a bitter pill to swallow knowing Apple did virtually nothing with the look of the iPhone 8 and iPhone 8 Plus.
It’s unclear how many will bite. A study conducted by SurveyMonkey and Creative Strategies found that a third of current iPhone owners wouldn’t buy a new iPhone if it were too expensive. Another third said they would look to another model.
“The iPhone 8 will remain their mainstream phone,” said IHS Markit analyst Wayne Lam.
Just don’t underestimate the need to be special and show that you have the latest and greatest tech out there.
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